21st March 2008, 10:59 AM
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Member
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Join Date: Oct 2006
Location: Mumbai
Posts: 1,336
Appreciation: 51
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Re: Ban On Short Selling In Daytrading
Looks Like There Is Plenty Of Confusion Still Persisting.
Lets Take The Annexure-I Point By Point
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1. “Short selling” shall be defined as selling a stock which the seller does not own at the time of trade.
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The Above Point Is Quite Clear & Doesnot Require Any Clarification
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2. All classes of investors, viz., retail and institutional investors, shall be permitted to short sell.
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This Dispels Who Can & Who Cannot
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3. Naked short selling shall not be permitted in the Indian securities market and accordingly, all investors would be required to mandatorily honour their obligation of delivering the securities at the time of settlement.
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Please Note The Word 'Settlement' Which Should Be Clear In Its Meaning That Delivery Based Short Selling.
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4. No institutional investor shall be allowed to do day trading i.e., square-off their transactions intra-day. In other words, all transactions would be grossed for institutional investors at the custodians’ level and the
institutions would be required to fulfill their obligations on a gross basis.
The custodians, however, would continue to settle their deliveries on a net
basis with the stock exchanges.
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Has No Implications To The Retail Traders For Intraday Short Sellers
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5. The stock exchanges shall frame necessary uniform deterrent provisions and take appropriate action against the brokers for failure to deliver securities at the time of settlement which shall act as a sufficient deterrent against failure to deliver.
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This Pertains To Settlement, Probably Will Have Same Consequences Such As Auctions & Closeouts
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6. A scheme for Securities Lending and Borrowing (SLB) shall be put in placeto provide the necessary impetus to short sell. The introduction of a fullfledged securities lending and borrowing scheme shall be simultaneous with the introduction of short selling by institutional investors.
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Although It Does Not Pertain To Retail Investors, It Sstill Means The Operation Shall Be Almost Seamless
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7. The securities traded in F&O segment shall be eligible for short selling. SEBI may review the list of stocks that are eligible for short selling
transactions from time to time.
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The New Rule Applies Only To Those Stocks Which Are Also Present In Derivatives
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8. The institutional investors shall disclose upfront at the time of placement of order whether the transaction is a short sale. However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.
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For Institutional Investors Having To Declare Upfront Before The Placement Of Order Simply Means SLB Comes Into Effect For The Particular Trade & Similarly, Declaration By Retail Investor After The Market, So That The Mechanism Of Borrowing & Lending Can Happen For The Paricular Trade Or Else It Will Be Auctioned As It Is Done Now.
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9. The brokers shall be mandated to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day. The stock exchanges shall then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis. The frequency of such disclosure may be reviewed from time to time with the approval of SEBI.
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This Is More Or Less Self Explanantory & Would Be Useful Knowing The Nett Short On A Particular Scrip For Purpose Of Analysis
That Takes Care Of The Annexure-I
SavantGarde
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